Question

Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski Outfit will attempt to sell the merchandise, and in return, Mogul will pay to Ski Outfit a 15% sales commission on any merchandise sold. During the year, Mogul ships inventory with a cost of $92,500 to Ski Outfit. By the end of the year, $70,000 of the merchandise has been sold to customers for a total of $98,000. What amount of inventory will Mogul report at year end

Answer 1

Answer:

$22,500

Explanation:

Given that,

During the year, Cost of shipping inventory to the Ski Outfit = $92,500

By the end of the year, amount of merchandise sold to customers = $70,000

Mogul will repeat inventory at the year end:

= Cost of inventory sent to consignee - Cost of inventory sold by consignee

= $92,500 - $70,000

= $22,500

Therefore, the amount of inventory will Mogul report at year end is $22,500.